The National Association of Home Builders (NAHB) monthly measure of builder confidence and market conditions rose one point between August and September, a high mark for the year and the highest since October 2018, according to data released Tuesday.
The Housing Market Index (HMI) clocked in at 68 in September, according to the data.
HMI is a weighted average of separate indices for three single-family data points. It asks respondents to rate the market conditions for the sale of new homes at present and in the next six months, as well as the traffic of prospective buyers of new homes. It falls in a range of 0-100.
“Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor,” NAHB Chairman Greg Ugalde said in a statement.
The index measuring current sales conditions climbed two points to 75 while the index measuring the traffic of prospective buyers held steady at 50. The measure charting expectations in the next six months fell one point, to 70.
“Solid household formations and attractive mortgage rates are contributing to a positive builder outlook,” NAHB Chief Economist Robert Dietz said in a statement. “However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China.
“NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas,” Dietz added.